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The date for unveiling a redraft of the Department of Labor’s proposed rule redefining the definition of fiduciary under the Employee Retirement Income Security Act is drawing closer. Phyllis Borzi says DOL will not be granting the brokerage industry’s wish of releasing a rule that mirrors the fiduciary rule being crafted by the Securities and Exchange Commission.

Borzi, assistant secretary of the DOL’s Employee Benefits Security Administration and chief architect of the fiduciary redraft, told Investment Advisor in an exclusive interview in mid-March that while brokerage industry trade groups have been prodding the DOL and SEC to collaborate on their fiduciary rules so that they end up with “one fiduciary standard,” having identical rules just isn’t possible.

The DOL and SEC follow “two separate statutes that are so very different,” Borzi told Investment Advisor. “The securities laws are based on a disclosure model. ERISA is not. Often disclosure is part of what we might require in our prohibited transaction exemptions, but [ERISA] is a flat out prohibition against conflicts of interest,” she says, “in part because Congress viewed retirement assets as special from other kind of savings.”

Said Borzi: “Even if the SEC and DOL collaborated on the same definition of fiduciary, it wouldn’t really get [the brokerage industry] what they want, which is a single set of rules, because even if the same people were defined as fiduciaries, the rules that they would be subject to as fiduciaries in the two different statutory schemes would be so very different.”

However, while the two agencies’ rules “can’t be identical,” she says, “they can be consistent and compatible.” Borzi adds that the SEC’s drafting of a rule to put brokers under a fiduciary mandate and DOL’s fiduciary rule do share a “primary commonality,” which is “to be clearer as to who is a fiduciary under their respective statutes and what [those fiduciaries’] rights and responsibilities are.”

When the EBSA does reissue its proposal, which Borzi has said would come in the first half of this year, it will come in three parts: the regulation itself; the economic analysis (which will include data on individual retirement accounts); and all of EBSA’s prohibited transaction amendments to existing exemptions as well as new amendments.

The set of prohibited transaction exemptions will address 12(b)-1 fees, revenue sharing and principal trading. Borzi said the rule will also address rollovers.

While reluctant to specify an exact date on the reproposal’s release, Borzi says that EBSA is “working and moving forward and are in pretty good shape with our economic analysis,” an area where she says EBSA has been collaborating with SEC economists.

That economic analysis will include data on the costs of applying a fiduciary standard to IRA recommendations, which has been a controversial aspect of the rule. Since EBSA’s attempts to secure data from the industry about the impact on IRA investors of conflicts of interest faced by brokers and advisors who advise on IRAs have failed, Borzi said the department is using “a wide variety of data sources” to compile its cost/benefit analysis on IRAs.

Borzi says she remains “puzzled” as to why the industry trade groups failed to provide EBSA with “data at the individual level on IRAs” to help in the department’s cost/benefit analysis when it was precisely the information those same trade groups told her EBSA would need.

As to those who worry the rule will be skewed in favor of fee-based advice, Borzi pledges that the rule will “not tilt toward one business model.” The rule, she says, “will simply say what we’ve been saying from the beginning: You need to not give conflicted advice.”